Ramalinga Raju's arrest was only the start of a long process of dispensing retributive justice in the Satyam case. Things have got murkier since he owned up to a Rs 7,000-crore swindle. His claim about Satyam's 3 per cent operating margin has raised eyebrows, given Indian IT majors have profit margins of 25-30 per cent. Even if Satyam tried to undercut competitors with cheaper service rates, the figure seems suspect. Was Satyam more cash-rich than claimed? If so, where did the money go? Whether through active collusion or blinkered apathy, who else participated in the multi-layered scam? Corporate governance means recognition of the primacy of shareholder rights. The company board's independent directors and Pricewaterhouse auditors who issued clean financial chits were to protect these rights by ensuring adherence to corporate ethics. Why did these keepers of corporate conscience fail?

An independent director has claimed that the non-executive directors weren't privy to any accounting fraud, having "trusted" Pricewaterhouse's audited results. The statutory auditors, on their part, say their audits were above board. These protestations are hard to accept. The directors were already discredited by the aborted Maytas deal, which turned out to be a last-ditch attempt to replace Satyam's fictitious assets with "real assets". The transaction, botched by investor activism, was directly linked to the fraud perpetrated by Raju and was okayed by board members. Pricewaterhouse, auditing Satyam accounts since 1991, fumbled as a watchdog. Surely the most basic auditing standard mandated checking Satyam's balance sheet against bank statements, as Indian accounting regulations require.

There's a growing perception that independent company directors, engaged by the entities they're meant to watch, are far from independent. Many see board memberships as lucrative pastimes rather than corporate governance-related duties. The chances of whistle-blowing are low when arrangements, formal or informal, exist whereby they get a company's performance-related benefits.Conflicts of interest also arise with audit firms. A mother firm's subsidiaries, which may be less rigorous or competent, are legally treated as separate entities. These offer different services auditing or consultancy to the same companies. Moreover, non-executive directors and external auditors develop long associations with firms. Familiarity breeds complacency, to say nothing of possible benefits.

Given the Satyam scam's enormity, former independent directors can't get away with buck-passing, their impeccable credentials notwithstanding. Pricewaterhouse, the Indian arm of an internationally reputed audit firm, too must explain its obvious lapses. If, in place of deliberate collusion, it merely rubber-stamped Satyam's internal audits, that would constitute a gross violation of auditing norms. Uncovering the truth and punishing the guilty should be a mission for all investigating authorities concerned. No less than India's image is on the line.